Mr. Sonny Newman reports

C21 INVESTMENTS ANNOUNCES Q2 RESULTS

C21 Investments Inc. has released its unaudited interim financial statements and management discussion and analysis for the second quarter ended July 31, 2023. The company's financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). All currency is reported in U.S. dollars.

Q2 financial highlights (May 1, 2023, to July 31, 2023):

• Revenue of $7.2-million -- flat year-over-year (note -- state of Nevada cannabis sales were down 5 per cent over the comparative period);
• Earnings (loss) per share of nil;
• Gross margin of 40 per cent -- up 410 basis points sequentially; retail gross margin of 47 per cent;
• Cash flow from operations of $1.6-million, up 37 per cent from Q1 -- the 17th consecutive quarter of positive free cash flow;
• Retired the remaining $1-million balance on senior secured note.

Q2 management and operational commentary

"We are pleased to report strong cash flow generation and stable revenues again this quarter given the industry headwinds persisting in the first half of the year," stated chief executive officer and president Sonny Newman. "Despite market conditions, we experienced our first increase in same-store sales since 2021, a testament to the strength of our loyal customer base and a stabilizing market environment. Having now retired the balance owing on our senior secured note, we are actively pursuing expansion of our retail footprint in Nevada. We believe this will maximize margins from our cultivation assets."

C21's Q2 revenue of $7.2-million was flat over the previous year but outperformed Nevada market sales which saw total sales down 5 per cent over the comparative period. Lower wholesale revenues in the quarter were offset by an increase in retail sales.

Gross margin was 39.5 per cent for Q2, up 410 basis points sequentially, with retail gross margin at 46.5 per cent for the quarter. Gross margins improved for a second straight quarter from the impact of curtailing cultivation in previous quarters, yet are still compressed from historical levels by state-level pricing pressures and other factors (see MD&A for full discussion).

C21 reported Q2 net loss of $400,000, or nil earnings per share. The company generated $1-million of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Q2 cash flow from operations was $1.6-million, up 37 per cent from Q1 -- the 17th consecutive quarter of positive cash flow from operations. Free cash flow was $1.4-million for the quarter, up $300,000 sequentially, with $600,000 of accrued tax in the period.

Cash at the end of Q2 was $2.3-million, up $400,000 from the previous quarter. The remaining $1-million balance on the company's senior secured note was retired in the quarter. Total liabilities have been reduced by $1.5-million year to date.

Subsequent to the quarter-end, the company appointed Aron Swan as its chief operating officer (see news release dated Sept. 7, 2023). C21 has established the COO role to support the company's long-term growth objectives. In addition, the company completed construction on drive-through operations at its flagship dispensary in Sparks, commencing operation in September, ahead of schedule.

About C21 Investments Inc.

C21 Investments is a vertically integrated cannabis company that cultivates, processes and distributes quality cannabis and hemp-derived consumer products in the United States. The company is focused on value creation through the disciplined acquisition and integration of core retail, manufacturing and distribution assets in strategic markets, leveraging industry-leading retail revenues with high-growth potential multimarket branded consumer packaged goods. The company owns Silver State Relief and Silver State Cultivation in Nevada, including legacy Oregon brands Phantom Farms, Hood Oil and Eco Firma Farms. These brands produce and distribute a broad range of tetrahydrocannabinol and cannabidiol products from cannabis flowers, prerolls, cannabis oil, vaporizer cartridges and edibles.

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